Today’s contingent workforce is made up of a number of different workers, including freelancers, independent contractors (IC), temporary workers sourced via staffing agencies and statement of work-based (SOW) labor. In this article, we look dive into SOW spend: what is it and how does it integrate into your contingent workforce management strategy.
There’s a tendency for small and medium-sized organizations to categorize all non-employee labor under the same spend, but SOW spend absolutely must be differentiated within your vendor management system (VMS).
Understanding the difference between statement of work spend and traditional staffing agency spend will ensure your business saves money, is able to effectively manage non-employee workers (and vendors) and avoids any compliance headaches.
What is a statement of work?
SOW engagements are the strategic process of hiring non-employee workers on a per-project basis, in which companies do not control the work being done and are instead paying for a finished product to be delivered.
A statement of work will define the specific deliverables of the project, timelines, expectations and payments for the work being performed, ensuring that a non-employee worker understands exactly what is involved in working on a specific project for your business.
What are the benefits of integrating SOW spend into your non-employee workforce management strategy?
Implementing a SOW strategy into the management of your non-employee workforce will come with a number of benefits. Perhaps the most important of those is the ability to pay for results rather than hours worked, and the ability to mitigate risks.
Results:
Statement of work, or project-based employees, allow organizations to pay for results rather than hours worked. These non-employee workers provide specialized talent on an as-needed basis and are perfect for delivering specific projects that your organization is working on. Under a SOW relationship your company gets exactly what you pay for. You hire highly-skilled talent for a specific, predefined objective.
Mitigating risks:
Poorly managed contingent workers bring risks associated with contracts, security, benefits, intellectual property, and human resources. Incorporating SOW into your non-employee workforce management will mitigate these risks for those engaged via a SOW contract since your company will have properly documented their entire project.
Final Thoughts
Managing statement of work spend can be tricky. Payments vary from hourly, fee-based or milestone-based, and there are a number of vendors involved in the process of sourcing top talent to work on SOW projects.
Yet did you know that statement of work spend in many organizations dwarfs contract labor spend? In fact, industry research indicates that SOW spend is typically 65 percent of all contingent labor spend.
That’s why SOW spend should be managed in a vendor management system, in conjunction with the rest of your non-employee workforce, to gain complete visibility into your contingent workforce and the vendors you use to source them.
About Conexis VMS
Conexis is an award-winning Vendor Management System built for organizations that want the power of enterprise software without the complexity or cost.
Leveraging the latest technology, Conexis delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored, personal service you require. Learn more about our Company and why organizations Choose Conexis VMS.
Why Leading Companies Choose Conexis VMS
Conexis VMS is purpose-built for organizations seeking to manage their contingent labor spend effectively. Here’s why we're the right choice:
- Our Advanced Technology: We have the most modern and advanced VMS tech stack available today starting with the latest codebase and extending to our lightning-fast AWS microservice
- Fast Deployment: Get up and running in weeks, not months
- Transparent Pricing: Flexible pricing with no hidden costs and no set-up fees
- White-Label Ready: Customize the platform with your brand
- Real-Time Insights: Make faster decisions with built-in analytics
- Audit-Ready Compliance: Store contracts, worker data, and rates in one secure hub
- Open APIs - Effortless Integrations: Connect Conexis VMS to your ATS, HRIS, Finance, or BI systems in record time. Enjoy seamless data flow and instant visibility across all your tools
Looking to Switch Your VMS or Just Getting Started?
Whether you are looking to switch your VMS, or just getting started, we are here to help. Contact Us for a Free No-Obligation Consultation, See how Easy Conexis is to use by taking a quick 2 minute Self-Guided Online Demo, or Book a Personal Demo Today!
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